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China’s economic growth slows, yet beats expectations

China’s economy grew 6.9 percent in the third quarter this year. That’s according to the National Bureau of Statistics on Oct 19. The growth is the slowest for the world’s second largest economy since 2009, but it beat expectations.

The 6.9 percent growth in China’s economy in the third quarter put the GDP volume at 48 trillion yuan ($7.55 trillion). The rate is slightly less than the 7 percent growth in the first two quarters, and has put some pressure for China to reach its annual growth target. An official from the National Bureau of Statistics said a sluggish global economy and downward pressure domestically had weighed on the expansion. But the overall economy is still growing at a reasonable and stable range.

“Growth is near 7 percent, and the employment figures are good. In the first three quarters, 10.66 million new jobs were created, outperforming the target for the whole year. People’s incomes grew faster than GDP growth,” said Sheng Laiyun, spokesman of National Bureau of Statistics.

The data released Oct 19 also shows a 6.2 percent year-on-year growth in industrial output in the first nine months. Growth in fixed-asset investment, seen as a crucial driver of China’s economy, slipped to 10.3 percent. However, retail sales grew beyond predictions at 10.9 percent. despite current challenges, official said there are still strong cushions for the economy to grow in the next five years.

“China’s industrialization and urbanization moves are still underway. and there is still a development gap between the east and west regions. So growth potential is still strong. Plus, consumption is taking a bigger part in the economy, and the benefit of reform measures will manifest gradually. They are all going to support growth,” Sheng said.

But in the short to mid term, experts are calling for more economic stimulus to boost growth, and some say traditional central bank rate cuts are not enough.

“We expect the government to raise investment in infrastructure construction to stabilize the growth, while monetary easing is needed to support that. But the policy has its limits. China has cut interest rates five times, and reserve requirement rate three times since 2014, which lowered interest rates for companies of course. However, we still haven’t seen any encouraging investment boost or production expansion in the private sector,” said Lu Dan, assistant vice president of Consumer Banking, DBS Bank.

Officials seem confident about China’s economic fundamentals, saying they are aiming for more structural efforts, for example encouraging mass innovation and entrepreneurship.